South Korea's Government Hints at Additional Leverage ETF Curbs on July 19, Considering Extended Rebalancing Windows

According to Kim Yong-beom, presidential chief policy secretary, South Korea's financial authorities are reviewing additional measures to reduce market impact from single-stock leverage ETFs as of July 19. Speaking on KBS's Sunday Diagnosis, Kim said the government is considering extending the current 30-minute rebalancing window to two hours and potentially using derivatives instead of cash transactions to manage the spread between net asset value and market price.

The measures follow earlier steps announced on July 16, including a minimum 30 million won cash deposit requirement and mandatory bundled trading of 20 shares per lot. The Korea Financial Investment Association previously strengthened margin requirements by tightening the permissible spread from 3% to 2% across all ETFs and ETNs.